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RealTime Economic Issues Watch

In RealTime posts, PIIE senior staff and colleagues discuss the fast-moving economic news, financial developments, and public policy choices confronting the United States and the world.

Recent Posts

Ukraine Has Escaped Financial Meltdown—But Challenges Lie Ahead

by | March 4th, 2015 | 04:13 pm

The desperate financial crisis that Ukraine faced in February has been lifted temporarily by recent positive actions in Kiev. Ukraine is far from out of the woods, but it has bought time to undertake the reforms that its new government appears committed to carrying out. The most important recent development occurred in the late evening […]

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Bulgaria Has Problems—But Also Growth Prospects

by | March 3rd, 2015 | 05:07 pm

The latest European Commission’s economic forecast for Bulgaria [pdf], published on February 26, projects economic growth in 2016 to fall to half its 2011 rate—from 2 percent to 1 percent. Public debt is expected to double in the same period—from 15.7 percent of GDP to 30.3 percent. In addition, Bulgaria recorded the strongest average annual […]

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Greece Should Ponder the Benefits of Devaluation

by | February 27th, 2015 | 03:24 pm

Standard economic theory suggests that currency devaluation is a significant boon for export competitiveness and economic growth after a crisis. Although a direct devaluation is not available to Greece as a member of the euro area, the government in Athens should be considering other paths to that goal. Examples of such actions can be found […]

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PIIE Chart: Labor’s Waning Share in Manufacturing

by | February 27th, 2015 | 10:06 am

This chart shows that manufacturing has been transformed from a sector with a high labor income share into a sector in which labor accounts for less income than in the economy overall. Since 2000, labor’s share of the economy has fallen below its long term average. The chart reveals that the manufacturing sector plays an […]

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Labor’s Declining Share in Manufacturing

by | February 26th, 2015 | 05:01 pm

The slowdown in the growth of US wages in recent years is the result of many factors. Among them is the fact that in the last 15 years, the share of labor compensation as a portion of US total income has fallen below its normal cyclical variation. Before the turn of the century, the long-run […]

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A Greek Deal and What It Means

by | February 25th, 2015 | 12:28 pm

Greece and the Eurogroup have struck a deal designed to avoid another economic meltdown and even return Greece to economic growth. An additional four months have been added to an earlier two-month extension of the review of Greece’s economic reform program, giving Athens and its partners until the end of June to reach a more […]

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Greece’s Reprieve: In Praise of Kicking the Can Down the Road

by | February 24th, 2015 | 02:58 pm

The melodrama in Greece has produced demands that Athens and its European partners take decisive action to fix a complicated situation once and for all. In fact, kicking the can down the road—as the players did recently to avert a financial crisis—is an underrated and long-standing feature of debtor-creditor relations. The rattling metallic noise produced […]

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Greece Must Stop Grandstanding and Start Governing

by | February 24th, 2015 | 10:19 am

Greece’s last-minute agreement with the Eurogroup on Febuary 20 averted a potential major financial disaster. The Greek government was days from running out of money to pay the bills. But despite the claims of victory by both Prime Minister Alexis Tsipras and his European creditors, little has changed in the relationship among Europe, the International […]

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How Greece’s Creditors Can Encourage Its Return to Stability

by | February 24th, 2015 | 08:59 am

Now that over 75 percent of Greece’s debt has been transferred from private banks to the official sector backed by European taxpayers—there is a novel solution to the Greek tragedy that would satisfy the interests of borrowers as well as creditors. This solution could also temper unhelpful nationalism on both sides and doesn’t promote future […]

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GDP-linked Bonds: Can Argentina’s Failure Become Greece’s Success?

by and Eduardo Levy Yeyati | February 19th, 2015 | 07:46 am

The new Greek government has floated the idea of swapping the official Greek debt that is now held by EU countries and the European Stability Mechanism (ESM) with GDP-indexed bonds. The proposal has received support from some in the economics profession in various forums, for example here. But if precedent is any guide, the idea […]

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